Israeli Court Orders Discount Bank to Compensate Elderly Customer for Ignored Fraud Alerts

The Eilat Magistrate's Court recently ruled that Discount Bank was negligent in handling a fraud case involving a 70-year-old customer who reported suspicious activity on his account. Between December 7 and 9, 2021, eight unauthorized transfers totaling approximately 127,000 shekels were made from the customer's account to three recipients in Eastern Europe, alongside a loan of about 45,000 shekels taken out in his name. Despite the customer physically visiting the bank branch on December 9 to report the suspicious transactions and request account restrictions, three transfers and the loan were processed after his complaint.

The bank argued that all transactions were authorized using the customer's username, password, and one-time authentication codes, and claimed that transfers abroad by former Soviet Union nationals were common and not suspicious. The branch manager testified that the customer's report was considered a "request" rather than an official complaint and did not escalate the matter to the bank's cybersecurity department. The court rejected these claims, emphasizing that once the customer alerted the bank in person, the responsibility for any further activity shifted entirely to the bank.

The judge highlighted that the rapid sequence of transfers and loan issuance should have triggered immediate red flags, especially given the customer's age and limited Hebrew proficiency. The bank also failed to provide testimony from the employee who handled the customer on that day. Ultimately, the court ordered Discount Bank to reimburse the customer approximately 127,000 shekels plus interest and pay an additional 20,000 shekels in legal expenses, totaling around 147,000 shekels.

Attorney Yifat Ben Avi Brown, representing the customer, stated that the ruling underscores the banking system's duty to protect vulnerable populations, including seniors and new immigrants, and that banks must act promptly when suspicious account activity arises. Discount Bank has not issued a response to the verdict.